G.R. No. 244405




FIRST DIVISION [ G.R. No. 244405, August 27, 2020 ] HEIRS OF ISABELO CUDAL, SR., REPRESENTED BY LIBERTAD CUDAL, AND HEIRS OF ANTONIO CUDAL, REPRESENTED BY VICTORIANO CUDAL, PETITIONERS, VS. SPOUSES MARCELINO A. SUGUITAN, JR. AND MERCEDES J. SUGUITAN, RESPONDENTS. DECISION REYES, J. JR., J.: Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the Decision1 dated July 20, 2018 and the Resolution2 dated January 11, 2019 of the Court of Appeals (CA) in CA-G.R.CV No. 107522. Factual Antecedents A certain Juan Salva (who died intestate sometime in 1945) was the registered owner of a 154,344-square meter parcel of land (Lot H-5865) located at Nabaccayan (formerly Calaoagan), Gattaran, Cagayan, per Original Certificate of Title (OCT) No. P-283 issued on June 22, 1925. The said property consisted of several lots including Lot 2006 with an area of 12,092 square meters. On May 30, 1969, a certain Angela Cudal (Angela), claiming to be Juan Salva's granddaughter and only heir, executed an Affidavit of Adjudication and Sale (Affidavit) adjudicating unto herself the entire estate of Juan Salva extrajudicially, and selling the 7,092 square meters of Lot 2006 to Isabelo Cudal, Sr. (Isabelo, Sr.) and the remaining 5,000 square meters to Antonio Cudal (Antonio). On July 8, 1975, a certain Visitacion Pancho (Visitacion), also an alleged heir of Juan Salva, executed a Confirmation of Ownership, renouncing all her rights and interests over the 10,214-square meter portion of Lot 2006 in favor of Jose Say (Jose). This portion is denominated as Lot 12 subject of the present controversy.3 Jose registered the Confirmation of Ownership in the Registry of Deeds of Cagayan. OCT No. P-283 was partially cancelled and Jose also secured the issuance of Transfer Certificate of Title (TCT) No. T-30896 in his name. Jose conveyed his right over Lot 12 in a Deed of Absolute Sale dated September 29, 1975, in favor of La Vilma Realty Co., Inc. (La Vilma Realty) for P2,042.00. La Vilma Realty thereafter registered the Deed of Absolute Sale and caused the issuance of TCT No. T-31041. On February 3, 2001, La Vilma Realty executed a Deed of Absolute Sale in favor of Marcelino Suguitan, Jr. (Marcelino), and the latter caused the registration of the said Deed with the Registry of Deeds of Cagayan and secured the issuance of TCT No. T-125624 in the name of Marcelino and Mercedes J. Suguitan (respondents).4 Marcelino also bought a rice mill located on the eastern portion of Lot 12, not from La Vilma Realty, but from a certain Agcaoili. It appeared that respondents filed a complaint for forcible entry against Libertad Cudal (Libertad) and five other John Does before the Municipal Trial Court (MTC) of Gattaran, Cagayan. Said complaint, however, was dismissed in an Order dated January 15, 2004. Said dismissal was affirmed on appeal to the Regional Trial Court (RTC) of Aparri, Cagayan.5 On August 21, 2007, the heirs of Isabelo, Sr. and Antonio (herein petitioners) filed a Complaint for Quieting of Title, Annulment of Instruments and Documents, and Cancellation of Certificate of Titles with Damages against the respondents and La Vilma Realty before the RTC of Aparri, Cagayan. Petitioners alleged that the issuance of TCT No. T-125624 in Marcelino's name clouded their rights and title as owners of Lot 12. Respondents and La Vilma Realty, in their Answer, raised the defenses of prescription and laches. They also argued that they are purchasers for value in good faith, and that the sale in favor of Isabelo, Sr. and Antonio was not registered in the Registry of Deeds of Cagayan and cannot prejudice third persons and the whole world. RTC Ruling Ruling in favor of petitioners, the RTC held that Visitacion cannot validly convey to Jose her rights over Lot 12 through the Confirmation of Ownership since at the time of the execution of said Confirmation, Angela already sold Lot 2006 to Isabelo, Sr. and Antonio.6 Furthermore, petitioners were able to show that Visitacion is not an heir of Juan Salva as she was prosecuted for falsification of a public document in connection with the Confirmation of Ownership, which was never rebutted by respondents.7 On the other hand, the RTC held that Marcelino's claim that Angela is not an heir of Juan Salva is self-serving and unsupported by independent proof, as it was declared in a judicial proceeding that Angela inherited from Juan.8 The RTC also ruled that Marcelino cannot be considered a purchaser for value in good faith in light of the following circumstances: (1) La Vilma Realty was not in possession of Lot 12; (2) there were existing improvements on the land; (3) petitioners were in actual possession of the land; and (4) Libertad had informed Marcelino of the sale to her predecessors-in-interest and even cautioned him not to buy the property.9 Applying the principle of prior tempore, potior jure, petitioners were held to have a better right since the sale to Isabelo, Sr. and Antonio was earlier than the transfer by Visitacion to Jose, and petitioners also possessed Lot 12 first in time.10 As regards prescription and laches, the RTC held that the action to quiet title in this case does not prescribe and petitioners filed the case after learning during a confrontation before barangay authorities that respondents had secured a certificate of title over Lot 12.11 However, the sale of the rice mill to respondents, not being disputed by petitioners, was upheld and the respondents were declared owners of the portion of Lot 12 where it stands.12 The dispositive portion of the Decision13 dated February 18, 2016, reads: WHEREFORE, premises considered, judgment is rendered as follows: 1. Declaring the heirs of Antonio Cudal the lawful owners of a 5,000 square meters portion of the subject lot (Lot 12, covered by TCT No. T-125624); 2. Declaring [respondents] Marcelino A. Suguitan, Jr. and Mercedes J. Suguitan the lawful owners of the rice mill on the subject lot together with the portion thereof on which it stands consisting of 150 square meters; 3. Declaring the heirs of Isabelo Cudal, Sr. the lawful owners of the remaining portion of the subject lot; 4. Nullifying and declaring null and void the following: (a) July 8, 1975 Confirmation of Ownership executed by Visitacion Pancho in favor, among others, of Jose Say; (b) September 29, 1975 Deed of Absolute Sale executed by Jose Say in favor of La Vilma Realty Co., Inc.; (c) February 3, 2001 Deed of Absolute Sale executed by La Vilma Realty Co., Inc. in favor of x x x Marcelino Suguitan; and (d) TCT No. T-30896 in the name of Marcelino Suguitan; and 5. Ordering the Registrar of Deeds of Cagayan to revive and reactivate OCT No. P-283 in its condition prior to the issuance of TCT No. T-30896 in the name of Marcelino Suguitan, and to issue the corresponding titles to the plaintiffs. No pronouncement as to costs. SO ORDERED.14 Respondents' Motion for Reconsideration (MR) and petitioners' Motion for Partial Reconsideration were denied in an Order dated June 13, 2016.15 Aggrieved, respondents filed an appeal before the CA under Rule 41 of the Rules of Court. CA Ruling In its assailed Decision, the CA granted the appeal and reversed the RTC Decision. It explained that an innocent purchaser for value shall have the attributes of a "man of reasonable caution" and an "ordinarily prudent and cautious man."16 In this case, considering that petitioners were occupying the lot, Marcelino conducted an investigation as to the nature of their claim over Lot 12 before he purchased the same. Thus, he is deemed to have "exercise[d] due diligence, conduct[ed] an investigation, and weigh[ed] the surrounding facts and circumstances like what any prudent man in a similar situation would do," acts which are consistent with that of an innocent purchaser of value.17 The CA arrived at this conclusion after examining the testimonies of Marcelino and Libertad and deduced the following: (1) Marcelino inspected the property and learned that some of the Cudal heirs have built their houses thereon; (2) Marcelino talked to Libertad and informed the latter that he was purchasing the lot from La Vilma Realty (the registered owner); (3) Marcelino learned from his conversation with Libertad that the petitioners anchored their claim of ownership over Lot 12 through Angela's Affidavit; and (4) in the process of his investigation, Marcelino consulted with and was assisted by an attorney to ascertain the veracity of petitioners' claim of ownership.18 The CA also noted that Angela's Affidavit was not registered in the Register of Deeds.19 Also, petitioners presented an Order dated June 1, 1974 in Cadastral Case No. 43 which cancelled OCT No. P-283 and ordered the issuance of TCTs in the names of Isabelo, Sr. and Antonio on the basis of Angela's Affidavit. The CA, however, noted that this Order was also unregistered for no TCT was issued pursuant thereto.20 The CA also opined that said Order is of doubtful validity since it was purportedly issued in connection with a land registration case ordering the cancellation of OCT No. P-283 beyond the one-year period from the OCT's date of entry.21 Furthermore, the land registration court overstepped its jurisdiction when it resolved questions of ownership and succession when it upheld Angela's status as Juan Salva's heir.22 As between the petitioners' unregistered claims and respondents' registered claims, preponderance of evidence lies in favor of the latter.23 Thus, petitioners failed to establish the requisites of an action for quieting of title, namely, the existence of Angela's equitable right over Lot 12 and that the respondents' apparently valid claim is false.24 Finally, the CA held that petitioners are guilty of laches as they failed to assert their rights for an unreasonable length of time by not having their claims over Lot 12 registered.25 The dispositive portion of the Decision dated July 20, 2018 reads: WHEREFORE, the Appeal of [respondents] Spouses Marcelino and Mercedes Suguitan and La Vilma Realty Co., Inc. is hereby GRANTED. The Decision dated 18 February 2016 of the Regional Trial Court, Branch 6, Second Judicial Region, Aparri, Cagayan, in Civil Case No. 11-4506 is hereby REVERSED. The Complaint filed by [petitioners] is hereby DISMISSED for lack of merit. SO ORDERED.26 Petitioners' MR was denied by the CA in a Resolution27 dated January 11, 2019, hence, the present Petition assigning the following errors: A. THE [CA] ERRED IN FINDING THAT [RESPONDENTS] ARE BUYERS IN GOOD FAITH B. THE [CA] ERRED IN FINDING THAT THE PANCHO CONFIRMATION OF OWNERSHIP PREVAILS OVER THE AFFIDAVIT OF ADJUDICATION AND SALE EXECUTED BY ANGELA CUDAL. C. THE [CA] ERRED IN FINDING [THAT] LACHES BARRED IN FILING THE COMPLAINT28 Petitioners argue that respondents cannot be considered as buyers in good faith, for although Marcelino claimed that he spoke to Libertad who even warned him not to purchase the lot in dispute as they had claims over the same, Libertad was not even occupying Lot 12 (but Lot 11) and Marcelino did not speak with Antonio's heirs who were actually occupying Lot 12. Applying Article 154429 of the Civil Code, petitioners argue that they have a better right being the prior possessor since respondents did not register their title in good faith. Lastly, petitioners argue that they cannot be held guilty of laches. Respondents argue that the CA correctly found that they are buyers in good faith for they did not merely rely on La Vilma Realty's title since Marcelino conducted an investigation into petitioners' claim over Lot 12 and even sought legal advice before proceeding with the acquisition of the disputed lot. Furthermore, Angela's Affidavit, although executed earlier, should not prejudice them as it was not registered with the Register of Deeds, and petitioners' failure for an unreasonable length of time to have the sale in their favor registered makes them guilty of laches.30 In their Reply,31 petitioners reiterated their arguments in the Petition. As regards laches, they argue that the non-registration of Angela's Affidavit, as well as their failure to secure a tax declaration in their name, should not be taken against them considering that they have long been in peaceful possession of the disputed lot, which was only disturbed when the respondents filed an action for forcible entry against them. They also emphasized that their action for quieting of title does not prescribe as they are in possession of the disputed lot. The Court's Ruling The ultimate issue before the Court is who between the parties have a better right over Lot 12 subject of this dispute. Before the Court discusses the issue of whether the respondents are buyers in good faith, we deem it necessary to discuss which between Angela's Affidavit (which is the basis of petitioners' claim of ownership) and Visitacion's Confirmation of Ownership (to which respondents and their predecessors-in-interest ultimately derive their title), should prevail. In this respect, it must be emphasized that petitioners cannot invoke Article 1544 of the Civil Code since the said provision finds no application in the present case. Said provision "contemplates a case of double or multiple sales by a single vendor, x x x where a single vendor sold one and the same immovable property to two or more buyers."32 In this case, there was no instance where Lot 12 was sold by the same seller to two or more different buyers, as the contending parties traced their claims ultimately to two different persons (Angela and Visitacion) both claiming to be Juan Salva's heirs. Rather than resolving the case from the prism of Article 1544, the question of who among the parties has a better right over Lot 12 must be answered by determining whether respondents acquired Lot 12 in good faith and for value from La Vilma Realty, the registered owner. This is so because respondents are dealing with registered land, and as will be discussed, the capacity of their predecessor-in-interest to convey title is relevant to determine whether they are innocent purchasers for value. In determining whether respondents are buyers in good faith, it must be pointed out that "the ascertainment of good faith, or lack of it, and the determination of whether due diligence and prudence were exercised or not, are questions of fact"33 which are beyond the ambit of petitions for review on certiorari under Rule 45 of the Rules of Court. However, in Heirs of Nicolas S. Cabigas v. Limbaco,34 the Court, while recognizing that the question of whether a person acted with good faith or bad faith in purchasing and registering real property is a question of fact,35 also stated that when there is no dispute as to the facts, the question of whether or not the conclusion drawn from these facts is correct is a question of law.36 At any rate, even if the question be considered as one of fact, this case falls within one of the recognized exceptions to the general rule that this Court is not a trier of facts considering that the findings of the CA are contrary to those of the RTC.37 To determine whether respondents are buyers in good faith, the Court's pronouncement in Spouses Bautista v. Silva38 is instructive: A holder of registered title may invoke the status of a buyer for value in good faith as a defense against any action questioning his title.Ꮮαwρhi৷ Such status, however, is never presumed but must be proven by the person invoking it. A buyer for value in good faith is one who buys property of another, without notice that some other person has a right to, or interest in, such property and pays full and fair price for the same, at the time of such purchase, or before he has notice of the claim or interest of some other persons in the property. He buys the property with the well-founded belief that the person from whom he receives the thing had title to the property and capacity to convey it. To prove good faith, a buyer of registered and titled land need only show that he relied on the face of the title to the property. He need not prove that he made further inquiry for he is not obliged to explore beyond the four corners of the title. Such degree of proof of good faith, however, is sufficient only when the following conditions concur: first, the seller is the registered owner of the land; second, the latter is in possession thereof; and third, at the time of the sale, the buyer was not aware of any claim or interest of some other person in the property, or of any defect or restriction in the title of the seller or in his capacity to convey title to the property. Absent one or two of the foregoing conditions, then the law itself puts the buyer on notice and obliges the latter to exercise a higher degree of diligence by scrutinizing the certificate of title and examining all factual circumstances in order to determine the seller's title and capacity to transfer any interest in the property. Under such circumstance, it is no longer sufficient for said buyer to merely show that he relied on the face of the title; he must now also show that he exercised reasonable precaution by inquiring beyond the title. Failure to exercise such degree of precaution makes him a buyer in bad faith.39 (Citations omitted and emphasis in the original) Additionally, in Gabutan v. Nacalaban,40 it was stated that the buyer must investigate the rights of the actual possessor in cases where the purchased land is in possession of a person other than the seller, to wit: The "honesty of intention" which constitutes good faith implies a freedom from knowledge of circumstances which ought to put a person on inquiry. If the land purchased is in the possession of a person other than the vendor, the purchaser must be wary and must investigate the rights of the actual possessor. Without such inquiry, the purchaser cannot be said to be in good faith and cannot have any right over the property.41 (Citations omitted; emphases in the original). Applied to the present case, what is not disputed is that despite La Vilma Realty being the registered owner, petitioners are in actual possession of Lot 12. Hence, following the discussion above, respondents cannot merely rely on the face of La Vilma Realty's title but must now exercise a higher degree of diligence and investigate petitioners' claim. On this score, we find that the CA erred in finding that respondents were buyers in good faith. To the Court's mind, that Marcelino verified the title with the Register of Deeds; inspected the property and confirmed that some of the heirs of Isabelo, Sr. and Antonio were in possession of Lot 12;42 and was able to speak with Libertad from whom he discovered that the petitioners were also claiming ownership on the basis of Angela's Affidavit, and even warned him not to buy the property,43 do not meet the higher degree of diligence required under the circumstances. Rather, what these circumstances establish is that as a result of such inspection, respondents were already aware of petitioners' possession and adverse claim over Lot 12. This should have prompted them to investigate La Vilma Realty's capacity to convey title to them and consequently lead them to ascertain the veracity of Visitacion's Confirmation of Ownership; however, respondents have not shown that they undertook such steps before finally deciding to purchase Lot 12. As such, the Court cannot sustain the CA's conclusion that respondents were innocent purchasers for value. Not being innocent purchasers for value, respondents cannot have a better right over Lot 12. Finally, as regards the issue of laches, while it is true that actions to quiet title do not prescribe when the plaintiff is in possession of the subject property,44 the question of laches is independent of the question of prescription. As aptly stated in Nielson & Co., Inc. v. Lepanto Consolidated Mining Co.:45 [T]he defense of laches applies independently of prescription. Laches is different from the statute of limitations. Prescription is concerned with the fact of delay. Whereas laches is concerned with the effect of delay. Prescription is a matter of time; laches is principally a question of inequity of permitting a claim to be enforced, this inequity being founded on some change in the condition of the property or the relation of the parties. Prescription is statutory; laches is not. Laches applies in equity, whereas prescription applies at law. Prescription is based on fixed time, laches is not.46 Nevertheless, we find that petitioners are not guilty of laches. The elements of laches are as follows: (1) conduct on the part of the defendant, or of one under whom claims, giving rise to the situation of which complaint is made an[d] for which the complaint seeks a remedy; (2) delay in asserting the complainant's rights, the complainant having had knowledge or notice of the defendant's conduct and having been afforded an opportunity to institute a suit; (3) lack of knowledge or notice on the part of the defendant that the complainant would assert the right on which he bases his suit; and (4) injury or prejudice to the defendant in the event relief is accorded to the complainant, or the suit is not held to be barred.47 It must be noted that the delay to be ascertained in this case for purposes of laches is not the delay on the part of the petitioners in having their claim over Lot 12 registered, as the CA held, but the delay in instituting the action to quiet title. In this case, there was no delay for as found by the RTC, petitioners filed their action before the RTC after learning during a confrontation in the barangay that respondents already secured a TCT in their names over Lot 12. Furthermore, respondents were aware of petitioners' claim over Lot 12 by virtue of Angela's Affidavit. Lastly, there is no injury or prejudice on the part of the respondents if petitioners will be accorded relief, for as already ruled, respondents cannot have a better right over Lot 12 for they are not innocent purchasers for value despite holding a TCT in their names. WHEREFORE, the petition is GRANTED. The assailed Decision dated July 20, 2018 and Resolution dated January 11, 2019 of the Court of Appeals in CA-G.R. CV No. 107522 are hereby REVERSED AND SET ASIDE. The Decision dated February 18, 2016 and Order dated June 13, 2016 of the Regional Trial Court of Aparri, Cagayan, Branch 6, in Civil Case No. 11-4506 are REINSTATED. SO ORDERED. Peralta, C. J., (Chairperson), Caguioa, Lazaro-Javier, and Lopez, JJ., concur. Footnotes 1 Penned by Associate Justice Rafael Antonio M. Santos, with Associate Justices Apolinario D. Bruselas, Jr. and Germano Francisco D. Legaspi, concurring; rollo, pp. 16-55. 2 Id. at 57-62. 3 As confirmed in the Sketch/Special Plan of Lot[s] 11 and 12, x x x in relation to Lot 2006, x x x and Report of Relocation Survey dated February 27, 2003; see CA Decision, id. at 19. 4 The RTC Decision states that Marcelino secured the issuance of TCT No. T-125624 in his name, id. at 71. The CA Decision, on the other hand, states that TCT No. T-125624 is in the name of Marcelino A. Suguitan, Jr. and Mercedes J. Suguitan, id. at 18. 5 See CA Decision, id at 19-20. 6 Id. at 73. 7 Id. 8 Id. 9 Id. at 75. 10 Id. at 75-76. 11 Id. at 77. 12 Id. 13 Penned by Judge Neljoe A. Cortes; id. at 70-78. 14 Id. at 77-78. 15 Id. at 79-86. 16 Id. at 38, citing Philippine National Bank v. Heirs of Estanislao and Dengracias Militar, 526 Phil. 788, 797 (2006). 17 Id. 18 Id. at 37. 19 Id. at 39. 20 Id. at 42. 21 Id. at 46-47. 22 Id. at 48-49. 23 Id. at 49. 24 Id. 25 Id. at 54. 26 Id. at 54-55. 27 Supra note 2. 28 Rollo, pp. 7 and 11. 29 ART. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property. Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property. Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith. 30 Comment; rollo, pp. 202-211. 31 Id. at 213-216. 32 Consolidated Rural Bank Inc. v. Court of Appeals, 489 Phil. 320, 331 (2005), PHILIPPINE LAW ON SALES 100. 33 Philippine National Bank v. Heirs of Estanislao and Deogracias Militar, supra note 16 at 799. 34 670 Phil. 274 (2011). 35 Id. at 652, citing Spouses Bautista v. Silva, G.R. No. 157434, September 19, 2006, 502 SCRA 334. 36 Id. at 655, citing Far East Marble (Philippines), Inc. v. Court of Appeals, G.R. No. 94093, August 10, 1993, 225 SCRA 249. 37 The recognized exceptions listed in Medina v. Mayor Asistio, Jr., 269 Phil. 225, 232 (1990), are as follows: (1) When the conclusion is a finding grounded entirely on speculation, surmises or conjectures; (2) When the inference made is manifestly mistaken, absurd or impossible; (3) Where there is a grave abuse of discretion; (4) When the judgment is based on a misapprehension of facts; (5) When the findings of fact are conflicting; (6) When the Court of Appeals, in making its findings, went beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee: (7) The findings of the Court of Appeals are contrary to those of the trial court; (8) When the findings of fact are conclusions without citation of specific evidence on which they are based; (9) When the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the respondents; and (10) The finding of fact of the Court of Appeals is premised on the supposed absence of evidence and is contradicted by the evidence on record. 38 533 Phil. 627 (2006). 39 Id. at 638. 40 788 Phil. 546 (2016). 41 Id. at 578. *42 See CA Decision, rollo,* p. 36.** 43 Id. at 34-35. 44 This rule was explained in Sapto v. Fabiana, 103 Phil. 683, 687 (1958), cited in Heirs of Ciriaco Bayog-Ang v. Quinones, G.R. No. 205680, November 21, 2018, as follows: The prevailing rule is that the right of a plaintiff to have his title to land quieted, as against one who is asserting some adverse claim or lien thereon, is not barred while the plaintiff or his grantors remain in actual possession of the land, claiming to be owners thereof, the reason for this rule being that while the owner in fee continues liable to an action, proceeding, or suit upon the adverse claim, he has a continuing right to the aid of a court of equity to ascertain and determine the nature of such claim and its effect on his title, or to assert any superior equity in his favor. He may wait until his possession is disturbed or his title is attacked before taking steps to vindicate his right. But the rule that the statute of limitations is not available as a defense to an action to remove a cloud from title can only be invoked by a complaint when he is in possession. One who claims property which is in the possession of another must, it seems, invoke his remedy within the statutory period. (Citations omitted) 45 125 Phil. 204 (1966). 46 Id. at 219. 47 Supra note 44. The Lawphil Project - Arellano Law Foundation